Analysts from CGS-CIMB Research, DBS Group Research, and Maybank Kim Eng are mixed on CDL Hospitality Trusts (CDLHT) following its results on July 29.
The REIT posted a 63.7% y-o-y plunge in 1H20 distribution per stapled security (DPS) of 1.51 cents, and a 44.5% y-o-y decline in revenue to $52.1 million due to the halt in global tourism and travel amid the Covid-19 outbreak.
See: CDL Hospitality Trusts reports 63.7% plunge in 1H20 DPS of 1.51 cents
CGS-CIMB analysts Eing Kar Mei and Lock Mun Yee have maintained their “add” recommendation on the stock with an unrevised target price of $1.20, as they believe 2Q20 could be the worst for the Trust this year, barring the occurrence of a second Covid-19 wave.
CDLHT’s DPS came in line with Eing and Lock’s expectations at 45% of their projected DPS of 3.3 cents for FY20F.
“CDLHT did not declare a capital distribution in 1HFY20 but it is likely to declare some at the year-end as the situation improves,” they say.
DBS Group Research’s Derek Tan and the Singapore research team have also maintained their “buy” recommendation with a target price of $1.30 due to “green shoots arising” upon the gradual reopening of hotels in Singapore.
“We remain buyers of CDREIT despite the expected weak results in 1H20 as we anticipate that the stock will rebound significantly once clarity returns to the global travel market in time to come. The potential for earnings to rebound fast is high as its hotels should be able to capture higher occupancy and higher rates once the travel gloom lifts (hopefully in 2021),” they say.
Conversely, Maybank Kim Eng analyst Chua Su Tye sees a slow DPS (or DPU) recovery into 2H despite the reopening of CDLHT’s hotels in Italy, Maldives, and the UK, while demand from government-related businesses ease off in 4Q for its hotels in Singapore and New Zealand.
“While we see improving fundamentals against a gradual pick-up of cross-border travel, demand visibility into FY21 remains weak,” says Chua, who prefers Ascott Residence Trust (ART) for its diversified portfolio, long-stay focused assets, and upside from capital distributions.
As such, Chua has maintained his “hold” call on the Trust with a target price of 95 cents.
As at 4.49pm, units in CDLHT are changing hands 0.5 cents higher, or 0.5% up, at 97.5 cents.
